HQ 0955023 - Supercalenders Used in Papermaking; Paper Making, Paper Finishing, On-Machine Calenders, Off-Machine Calenders; Cylinders for Calendering Machines, Parts of Machines for Making Paper; Sulzer Escher Wyss, Inc. v. United States, Slip Op.93-113; Paper Coating Machines and Parts; NY 833073 and NY 833074 Modified - United States International Trade Commision Rulings

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HQ 955023

DECEMBER 6 1993

CLA-2:CO:R:C:M 955023 JAS

CATEGORY: CLASSIFICATION

TARIFF NO.: 8420.10.20, 8420.91.20, 8420.99.20, 8439.30.00, 8439.99.50

Ms. Ann P. Sheffield
The Myers Group (U.S.), Inc.
2831 Talleyrand Avenue, Suite 200
Jacksonville, FL 32206-0997

RE: Supercalenders Used in Papermaking; Paper Making, Paper Finishing, On-Machine Calenders, Off-Machine Calenders; Cylinders for Calendering Machines, Parts of Machines for Making Paper; Sulzer Escher Wyss, Inc. v. United States, Slip Op.93-113; Paper Coating Machines and Parts; NY 833073 and NY 833074 Modified

Dear Ms. Sheffield:

Your letter of August 9, 1993, to the Area Director of Customs, New York Seaport, has been referred to this office for reply. The inquiry concerns the current status of two rulings issued to your client, Valmet-Appleton, Inc., on supercalenders and cylinders therefor, and on coating machines and their parts, in light of a recent decision by the United States Court of International Trade in Slip Op. 93-113.

In Sulzer Escher Wyss, Inc. v. United States, Slip Op. 93- 113, dated June 22, 1993, the court held that supercalenders, consisting of a calender stack used to increase the density, smoothness and gloss of paper, were classifiable free of duty in subheading 8420.10.20, HTSUS, as calendering machines for making paper pulp, paper or paperboard. The court reasoned that these machines performed a finishing operation considered by the paper industry to be integral to the process of "making" paper. The court reached this conclusion despite the fact the machines were off-line, that is, physically separate from the papermaking machine. Customs had traditionally regarded only machine calenders which are on-line as being integral to the process of making paper.

SUPERCALENDERS AND PARTS

In NY 833073, dated November 17, 1988, the Area Director held, in part, that supercalenders for papermaking machines were classifiable in subheading 8420.10.90, Harmonized Tariff Schedule of the United States (HTSUS), as other calendering or similar rolling machines; that cylinders for supercalenders were classifiable in subheading 8420.91.90, HTSUS, as other cylinders; and, that other parts solely or principally used with supercalenders were classifiable in subheading 8420.99.90, HTSUS, as other parts. The descriptions of the merchandise and the other contents of NY 833073 are incorporated by reference in this decision.

Because of the court's decision in Slip Op. 93-113, and its express rejection of any tariff distinction based on use on-line or off-line, supercalenders the subject of NY 833073 will now be classified in subheading 8420.10.20, HTSUS, as calendering machines for making paper pulp, paper or paperboard. Cylinders that are parts used solely or principally with supercalenders will now be classified in subheading 8420.91.20, HTSUS, as cylinders for calendering or other rolling machines for machines for making paper pulp, paper or paperboard. Parts used solely or principally with cylinders or with supercalenders will now be classified in subheading 8420.99.20, HTSUS, as parts of machines for making paper pulp, paper or paperboard. The rate of duty under these provisions is free.

PAPER COATING MACHINES AND PARTS

In NY 833074, dated November 17, 1988, the Area Director of Customs addressed the tariff status of surface blade coating machines and two-stream coating machines, both of which are used to apply and evenly smooth out coatings on one or both sides of paper or paperboard. The decision held that those machines used on-line were classifiable free of duty in subheading 8439.99.10, HTSUS, as parts of machinery for making paper or paperboard. Those machines used off-line were held to be classifiable in subheading 8439.30.00, HTSUS, as machinery for finishing paper or paperboard. The rate of duty is 2 percent ad valorem. The description of the merchandise and other contents of NY 833074 are incorporated by reference in this decision.

The Harmonized Commodity Description And Coding System Explanatory Notes (ENs) constitute the Customs Cooperation Council's official interpretation of the Harmonized System. While not legally binding on the contracting parties, and therefore not dispositive, the ENs provide a commentary on the scope of each heading of the Harmonized System and are thus useful in ascertaining the classification of merchandise under the System. Customs believes the notes should always be consulted. See T.D. 89-80. Relevant heading 84.39 ENs on page - 3 -

1229, under (III)(B), list machines (other than calenders) for applying various kinds of surface coatings, size, gum, varnish, enamel, metal powder, wax, etc., as being machinery for finishing paper or paperboard. The notes recognize no distinction between coating machines used on-line and those used off-line. As previously noted, Slip Op. 93-113 eliminates any tariff distinction between machines in the paper industry based on their use on-line or off-line so long as the process is one of "making" paper.

Accordingly, surface blade coating machines and two stream coating machines will be classifiable in subheading 8439.30.00, HTSUS, as machinery for finishing paper or paperboard. The rate of duty is 2 percent ad valorem. Parts used solely or principally with these machines that are not goods of any heading of chapter 84 or 85 will be classifiable in subheading 8439.99.50, HTSUS, as other parts of machinery for finishing paper or paperboard. The rate of duty is 3 percent ad valorem.

EFFECT ON OTHER RULINGS:

Under the authority of 177.9(d)(1), Customs Regulations, (19 CFR 177.9(d)(1)), NY 833073 and NY 833074, both dated November 17, 1988, are modified in accordance with this decision.

The modification of NY 833074 will not be applied retroactively in accordance with section 177.9(d)(2), Customs Regulations (19 CFR 177.9(d)(2)), and, therefore, will not affect past transactions for the importation of the merchandise they cover. However, for the purposes of future transactions involving merchandise of this type, NY 833074 will not be valid precedent.

We recognize that pending transactions may be adversely affected by this revocation, in that current contracts for importations arriving within the Customs territory subsequent to this decision will be classified in accordance with it. If such a situation arises, you may notify this office at your discretion and apply for relief from the binding effects of this decision as the circumstances may warrant.

Sincerely,

John Durant, Director
Commercial Rulings Division

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